Mitchell York, Professional EOS Implementer
How to Know if a Franchise is Right for You After Your Corporate Career
Many people look at franchises when they are cut loose from the corporate world or contemplate a life apart from the mothership. I have been a franchise owner for 12 years and have learned a lot about how to be successful in a franchised business. I receive frequent phone calls from people considering buying into the franchise. They always ask the same question: If you could go back, would you choose it again? The answer is yes, I would, but many franchisees in my system would not. Most people are ill-prepared to succeed in a business of their own. Even though the pitch of virtually every franchisor is that you will be in business “for yourself but not by yourself,” the truth is: success is all up to the franchise owner. Even though the statistics say franchised businesses are less likely to fail, if the franchisee doesn’t execute a well-conceived plan to make the franchise work, she still has a high risk of failure.
If you are thinking of buying a franchise, get some advice (but not from the franchisor) on evaluating and increasing your probability of success. There are lots of franchise “consultants” out there, like FranChoice, Entrepreneur’s Source and others. They are perfectly good firms with a great base of knowledge–but they are paid by the franchisor when you buy one of the franchises they represent. So they are not exactly objective.
A few things I think are important to consider when you are thinking about a franchise are:
Have you really reached the end of the line with regular employment? It’s so much easier to have a job than a business. Regular paycheck, health coverage, vacation…not so bad -- unless you absolutely, positively can’t tolerate the idea of working for anyone but yourself from now on. If you don’t pass that test, you probably should go get another job.
Are you falling in love with a franchise concept? Are you thinking that this pig looks really nice with that shade of lipstick? Love clouds your judgment when buying a franchise. The process is a lot like buying a house (and it could cost you as much). There’s a big emotional component to it -- and franchisors know this. They will play on your psychological investment in learning about the franchise and yearning for a different life. It may not be possible, or even desirable, to make a decision like this without emotion. But recognize that you are not being totally objective, either. You are being sold, you are selling yourself, and buying into a dream. Dreaming is good, if you can live the dream.
Do you have the skills to be in business? I’ve seen a lot of IT managers, engineers and other non-sales professionals start businesses and struggle. Not a knock against those folks, but I know of no franchise in which you do not have to be competent at sales and marketing to be successful. A transmission franchise doesn’t require you to know how to fix cars -- you just need to know how to get people into your store. That requires outreach, community participation, guerrilla marketing, networking, referral business, and a heavy dose of operating excellence (which the non-sales types often excel at). If you don’t have the skills yourself, do you have a partner or someone who can fill in your gaps? Don’t think the franchisor is going to drive people into your store and all you will have to do is serve them well. Remember, it’s your business, not theirs.
Need more help? Check out a book I wrote that's all about how to know if a franchise is right for you after your corporate career.